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Beginnings and Landmarks

Giant Sask. mill opened

Regina Leader Post
October 11, 1968. p. 50

By MEL HINDS

Staff Reporter

PRINCE ALBERT (Staff) - The combination of private and government enterprise culminated here Thursday with the official opening of what will be the province's largest single industrial employer.

The Province of Saskatchewan owns 30 per cent of the $65,000,000 Prince Albert Pulp Mill opened at ceremonies Thrusday afternoon. The giant world-wide pulp complex Parsons and Whittemore Inc. of New York owns the other 70 per cent.

It is estimated the total investment will be $80,000,000, including the capital cost of the mill itself, the woods operation and other factors involved in the over-all complex.

The operation will pump revenue into the province's economy as payments for goods and services, including a $10,000,000 payroll. That payroll is being dispensed in an area classified as depressed and where welfare handouts have been upwards of $500,000 a year.

Average payroll per worker in the mill is about $6,000 a year while woods operation employees, about 20 per cent of them Indians and Metis, can earn from $150 to $200 in a good week.

While total employment is not as high as the 3,000 to 3,500 figure used frequently by various government officials and agencies, it is described as already one of the largest in the province and is expected to soon become the largest.

The mill itself currently employs about 310 persons and that level is expected to remain the same. The woods operation is employing 400 and that figure will increase to 500 or 600 at peak operation.

The people of Saskatchewan have a large stake in the pulp operation. To start with, the provincial government invested $1,500,000 in Prince Albert Pulp Mill Co. Ltd. and agreed to back a loan of up to $50,000,000 in exchange for a 30 per cent interest. Parsons and Whittemore put up $7,000,000 in cash and borrowed $46,500,000 (in U.S. funds) from various U.S. bank and insurance companies.

In addition, the government set up a Crown company, Saskatchewan Pulpwood Ltd., to provide wood for the mill operations.

Provincial Treasurer Steuart said at a press conference Wednesday the province's investment in the wood cutting operation is about $11,000,000, including a $5,000,000 advance to the Crown company equipment and inventory and trucking and other contracts.

Under the agreement, Saskatchewan Pulpwood is to be sold to the pulp mill company in 1971 at market value. The agreement also provides that Saskatchewan Pulpwood will supply the sompany with 1,520,000 cords of wood a year at $18.50 a cord. If the company loses money at that price, Prince Albert Pulp Mill will pick up half the government's losses. There is also a provision that the $18.50 a cord can be increased, but by no more than 10 per cent totally and no more than five per cent in any given year.

The government has also provided concessions in the form of slashed stumpage dues (or royalties). The $1,40 a cord for spruce was cut to 70 cents and $1,10 a cord for jackpine was reduced to 80 cents. It is estimated the annual wood harvest from the 18,000 acres of Crown reserve held by the company will be about 500,000 cords, 70 per cent of which is spruce and the rest jackpine.

Even with the reduced stumpage fees the government will collect an annual $365,000 from them, money that would not have been collected without a pulp mill.

The province has also guaranteeed to spend about $2,000,000 on about 120 miles of roads from the forest area to the 2,500-acre mill site located 12 miles northeast of Prince Albert.

Prince Albert Pulp Mill also received a grant from the federal government as a depressed area under the area incentives program. It also receives federal tax concessions under the same plan.

The mill was designed to produce 650 tons a day of bleached kraft pulp, but officals say that the output will probably reach peaks of 700 tons a day. Start-up operations have been under way for about two months, with the peak daily production so far reaching 600 tons. Officials say the start-up operation so far has been highly successful, reaching a stage in two months not reached by most such operatins for about five months. Quality is said to be as good or possibly better than any in Canada.

A new separate company, the Prince Albert - St. Anne Sales Co. of New York has been set up to handle marketing, mostly in the midwest United States but also in Canada. Some pulp may also be marketed in Europe, depending on maret conditions. The new sales company will market the products of the Prince Albert mill and a new one being built by Parsons and Whittemore in New Brunswick.

Under the agreement with the government, Parsons and Whittemore or any of its agencies is entitled to charge a three per cent commission on its sales of Prince Albert pulp. However, the company has agreed not to charge the commission during the initial start-up period. Company officials say setting up the new marketing firm is much more economical than the Prince Albert company setting up its own sales organization: especially because of the market make-up it has to be located either in New York or Chicago.

Balancing the outlay by the province in the mill and woods operation are the overall benefits resulting from it, some already very real and some still intangible. It is estimated that total employment resulting directly and indirectly from the mill will be about 2,000 thus producing a total payroll much larger than the $10,000,000 a year in pay cheques produced by the mill itself.

Another example is that the provincial government has already regained, in the form of sales tax, more than its initial $1,500,000 capital investment. The plant spent $35,000,000 on machinery, most of it purchased in Eastern Canada, but the government obtained a share of that through the five per cent sales tax.

Many of the benefits are indirect. Interprovincial Co-operative Chemicals of Saskatoon, for example, has extended its Saskatoon plant to increase its daily production of caustic soda and chlorine from 16 to 46 tons, to supply the Prince Albert Mill. United Chemicals of Saskatoon is providing sulphuric acid and alum, and sodium sulphate salt cake is being purchased from several Saskatchewan sources including the three Crown-owned plants.

Nearly all of the raw materials and much of the other goods and services needed by the plant are being purchased in Saskatchewan.

Other examples of the products needed and purchased in the province are:

  • 500,000 cords a year of pulp wood;
  • 80,000 tons a year of chemicals (60,000 tons of that from Saskathcewan producers);
  • 25,000 kilowatts per hour of electricity from Saskatchewan Power;
  • 8,500 cubic feet per day of gas from SPC;
  • 36,000,000 gallons of water per day;
  • 1,500,000 gallons of petroleum products a year.

Further forest operations may also result from the pulp mill operation.

Karl F. Landegger, head of Parsons and Whittemore, told a press conference Wednesday night that plans are still proceeding for a saw mill in connection with the pulp mill. Plans should be complete in about a year and the mill would employ a further 50 to 60 men.

Company and government officials agree that as the mill operation progresses to full tempo there will be problems that will have to be worked out.

There is, for example, the question of river pollution. Mr. Landegger said the company has spent extensive sums on equipment to prevent pollution of the North Saskatchewan River on which it is located.

Provincial Treasurer Steuart agreed, stating that a watch will be kept on the situation and adding that the water does not get to the mill in very good condition because the upstream cities of Prince Albert and Saskatoon dump raw sewage into it.

The government will be doing as much as possible to assist those cities in obtaining sewage treatment facilities, he said.